Consumer confidence: third consecutive rise

• ANZ-Roy Morgan Australian Consumer Confidence rose a modest 0.7% last week to 119.2 – its highest value in 11 weeks. The details were mixed: a rise in views towards current financial and economic conditions was offset by lower expectations of future economic conditions.
• Households’ views toward current financial conditions bounced 1.7% last week following a 2.4% decline previously. Views towards future conditions edged up 0.2%, the third straight weekly increase (gains of 1.6% and 3.5% in the previous two weeks). Both subindices remain above their long term averages.
• Consumers continued to be optimistic about year-ahead economic conditions, with sentiment rising a solid 3.9% last week, after a similar rise in the previous week. Views towards future conditions were more restrained. This subindex slipped 0.7% last week, partially reversing the previous week’s 3.2% rise.
• The ‘time to buy a household item’ subindex eased 0.9% last week off a solid 4.1% bounce previously. Inflation expectations remained steady at 4.4% on a weekly basis.

ANZ’S HEAD OF AUSTRALIAN ECONOMICS, DAVID PLANK, COMMENTED:

“Encouragingly, confidence rose for the third straight week as consumers were more optimistic about near term financial and economic conditions. On the whole, economic conditions have risen from their recent low and now sit above their long term average (111.8 vs 107.9).

Expectations of personal tax cuts in the Budget next week are likely lifting sentiment to some extent. Some de-escalation in geopolitical tensions between North Korea and South Korea late last week may also have impacted.

Our estimates suggest that the tax cut, if implemented, would translate to a modest increase in disposable income for low-and-middle income earners. Even so, this should provide some support to household spending, particularly since wage growth is expected to improve only gradually.”

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